Putting Money Where a Community's Mouths Are

CMU Spin-Out Implements Digital Community Currency in Sharpsburg

Wednesday, May 10, 2023 - by Byron Spice

A pilot project of the Sharpsburg Neighborhood Organization and a Carnegie Mellon University spin-out called ZUZLab, Sharpsburg Bucks is a community currency.

When you sidle into Dancing Gnome, a brewpub on Sharpsburg's Main Street, and order a glass of its renowned Lustra pale ale, founder Andrew Witchey is happy to accept payment in cash, credit or Sharpsburg Bucks.

A pilot project of the Sharpsburg Neighborhood Organization and a Carnegie Mellon University spin-out called ZUZLab, Sharpsburg Bucks is a community currency — an alternative to U.S. currency that is accepted by at least a dozen Sharpsburg businesses. People can access their Sharpsburg Bucks through their mobile phones, completing transactions much as they would if using Apple Pay or other digital wallet services.

Brittany Reno, the town's mayor and executive director of the neighborhood organization, sees the Sharpsburg Bucks experiment as a way to boost local businesses and build on the community's strong existing social fabric.

"We have a ton of these amazing local small businesses, many of them owned by Sharpsburg residents," Reno said.

At the same time, the town has seen an influx of new residents over the past five years. Sharpsburg Bucks could motivate these new, often tech-savvy residents to do more of their shopping and dining within the Allegheny River town. And that could benefit businesses still grappling with the financial uncertainties caused by the pandemic, Reno said.

Sharpsburg Bucks and ZUZLab stem from research by Seth Goldstein, an associate professor in the School of Computer Science's Computer Science Department at CMU. His Building on Local Trust project developed a protocol that will allow reputation to form the basis of a new kind of financial asset, be it a community currency or a small business loan.

The project's larger ambition is to develop a system for local businesses that lack access to traditional capital markets typically used to raise money. A bakery, for instance, might create its own currency. Customers could buy blocks of the currency, which they could then use for future purchases of bakery goods.

This system would include a transparent ledger to enable people to trade one type of currency — such as the bakery bucks — for those of another business, such as a barber or a mechanic. Transparency will allow machine learning algorithms to analyze the ledger and come up with a reputation score that could be used to make it easier to borrow money from traditional lenders.

Goldstein acknowledges that this more extensive system is hard for people to wrap their heads around until they see it up and running, hence the decision to start with the easy-to-grasp concept of Sharpsburg Bucks.

"My hope is that, once people are familiar with this, it will create an environment where businesses will consider this an obvious way to raise money," said Goldstein, who is on sabbatical this semester while he gets Sharpsburg Bucks and ZUZLab up and running.

ZUZLab operates the community currency system, charging 1.5% of each transaction — half the rate charged by credit card processors — which is then split between ZUZLab and the neighborhood association.

"We're not trying to make a fortune with this," said Lisanne Biolos, co-founder of ZUZLab and a former director of executive talent development for KPMG, the global professional services firm. "The hope is that it will bring value to these communities."

Biolos said that ZUZLab has been talking with other communities in the Pittsburgh area about similar projects.

Businesses in Sharpsburg have been receptive to the community currency concept, particularly since it's not costing them anything to try it, Biolos said. For a limited time, Northwest Bank also provides a 10% bonus to people who buy up to $100 in Sharpsburg Bucks, which promises to provide dividends to those businesses accepting the currency.

Mayor Reno said local nonprofits also will be distributing Sharpsburg Bucks to thank their volunteers.

The simplicity of Sharpsburg Bucks has been a major selling point, Biolos said. For one thing, the community currency is digital, but unlike typical cryptocurrencies, it doesn't fluctuate in value.

"Sharpsburg Bucks are always valued at a dollar," she explained.

Witchey, of Dancing Gnome, said implementing the community currency proved to be "super easy." How successful it might be remains to be seen, of course, but he was happy to give it a try in hopes of benefiting the larger community.

"We've always pushed the community aspect of Sharpsburg," he said. "Since we opened our doors in October 2016, we've always been active in the community."

For more information, Contact:
Aaron Aupperlee | 412-268-9068 | aaupperlee@cmu.edu